National InsuranceFirst introduced by the National Insurance Act of 1911, the National Insurance system continues to fund some of the most important and necessary programs.
The National Insurance system is very similar to that of the UK. Currently, there are 4 classes of contribution with Class 1 being the most used as it is for employers and employees.
How are contributions made?
For employees, National Insurance will be taken out of your pay cheque automatically by your employer. The rate is 11%, on earnings between £145 and £864 per week, and 1% on all earnings above £864.
If you are self-employed you will pay a weekly Class 2 contribution of £5.70 and a further Class 4 contribution on your profits at 8% between £7,540 and £44,928 and 1% on profits over £44,928.
What do National Insurance payments fund?
National Insurance payments go towards the Manx State Pension, unemployment benefits, sickness benefits, maternity allowance and other social security benefits. A small percentage also goes to the Island’s NHS.
National Insurance Holiday Scheme
To grow the Island’s working population; the Isle of Man is offering a National Insurance Holiday Scheme which allows newly employed, relocated or returning residents to apply for a refund on their National Insurance contributions for their first year of living or returning to the Isle of Man, with refunds capped at £4,400.
The scheme is open to anyone who has not been an Isle of Man tax resident for the immediate last five tax years, and who takes up both residence and full time, permanent employment with a gross salary of £23,000 or more.
Returning students are also eligible for this scheme after completing a full time university degree, higher national diploma or postgraduate course outside the Island. Minimum salary requirements do not apply to returning students.
For more information concerning Income Tax in the Isle of Man, click here.